Publishing and the Smiling Curve

Ben Thompson wrote a couple of very interesting articles on the future of the publishing industry. The theme of both articles was the following “smiling curve” that he drew: 

The Internet has made content delivery free; which is why the publishing industry is getting wiped out. David Carr describes the clout of mobile apps like Facebook in particular on this topic: incident:

“For traditional publishers, the home page may soon become akin to the print edition — nice to have, but not the primary attraction. In the last few months, more than half the visitors to The New York Times have come via mobile — the figure increases with each passing month — and that percentage is higher for many other publishers.”

You might wonder why it matters how the publishers are getting traffic as long they are getting traffic. Thompson explains why the source matters:

“When people follow a link on Facebook (or Google or Twitter or even in an email), the page view that results is not generated because the viewer has any particular affinity for the publication that is hosting the link, and it is uncertain at best whether or not their affinity will increase once they’ve read the article. If anything, the reader is likely to ascribe any positive feelings to the author, perhaps taking a peek at their archives or Twitter feed.”

In other words, the right side of the smiling curve adds to the value of the left side of the smiling curve and makes the middle (publishers) with almost no value! The keyword there is “almost”. Remember the time the German publishers took Google to court to demand compensation for article snippets shown on Google News? Google responded by removing all such snippets and the publishers lost a huge amount of traffic. No wonder they went crawling back to Google asking to be added back…without compensation! Thompson has an interesting takeaway from that incident:

“The general takeaway (was) that Google proved it was adding value to the publishers, but I have a different angle: the publisher’s demonstrated that they provide no value to their writers.”

Publishing is appearing more and more like the middleman thanks to the Internet; and the middleman eventually gets thrown out…unless they bribe campaign with politicians to let them stay. And the German publishers are screaming to their government to save them: is that the only way for publishers to save themselves?